Drumbeat: May 4, 2010

Drilling expansion dead in Congress: Senator Nelson

WASHINGTON (Reuters) – Plans by U.S. President Barack Obama to expand oil drilling off the eastern coast of the United States are "dead on arrival" in Congress after the massive oil spill in the Gulf of Mexico, Democratic Senator Bill Nelson said on Tuesday.

Nelson, of Florida, made the prediction to reporters at a news conference as BP Plc was struggling to stop oil gushing from a ruptured undersea well in the Gulf of Mexico.

Nelson and two other anti-drilling Democratic senators also called for a huge increase in the liability oil companies must pay to clean up environmental disasters.

U.S. Coast Guard Says Oil Onshore From Gulf Spill

(Bloomberg) -- Oil from a leaking BP Plc well in the Gulf of Mexico reached the Louisiana shore in the area of the Chandeleur Islands.

As Gulf spill spreads, blame game begins

When BP looks at the spreading oil slick in the Gulf of Mexico that now threatens flora, fauna and livelihoods along the coasts of Louisiana, Mississippi, Alabama and Florida, it's really seeing money floating away on the tide.

That's why it may be trying to shift some of the blame for the massive undersea leak to Transocean, which was running the rig that exploded on April 20 and eventually sank, leaving one of the worst oil spills in history in its wake.

Oil spill won't hit gasoline prices in the short term

The disastrous oil spill off the coast of Louisiana isn't expected to affect U.S. gasoline prices in the short term, but it could produce a longer-term hit if offshore oil drilling is curbed or made more expensive with new regulations and safety measures.

Mexico's Pemex to issue $6.3 bln more debt in 2010

MEXICO CITY (Reuters) - Mexico's state oil monopoly Pemex expects to borrow another $6.3 billion this year to fund its capital investments and refinance existing debts.

Saudi oil official raises awkward but crucial questions

Last week, an unexpected warning came out of Saudi Arabia.

It was delivered by Khaled al-Falih, head of Saudi Aramco, the kingdom's state-owned oil group, and his message was blunt. Unless the world's top oil producer tackled inefficiencies in its energy system, the kingdom's stockpile of crude for export was in danger of falling by as much as 3m barrels per day by 2028, he said.

Given that Saudi Arabia has an unrivalled role in global oil markets, the message was one of which we should all take note.

Bill McKibben talks about how to live and organize on a reshaped ‘Eaarth’

My guess is that the availability of cheap fossil fuel everywhere has a homogenizing effect. Logic has led us to adopt the same few patterns over and over and over again in all kinds of places. If we move beyond that and begin dealing with much more indigenous energy resources in places all over the planet, my guess is the effect will be much less homogenous. People in a million different places will figure out a million different ways to deal with the world around them, because they’ll be dealing with the sun that falls on their place and the wind that blows by it or how much rain they get, what the cultural norms are and how dense their population is, and a thousand other variables that lead you in a lot of different directions.

The trophic theory of money

In ecology, or the economy of nature, “trophic” refers to the flow of energy and nutrients. The lowest trophic level is the producers, or plants that produce their own food in the process of photosynthesis. Herbivorous animals eat plants, and carnivorous animals eat herbivores. That’s the economy of nature in a nutshell. No plants, no animals. In other words, plants are the foundation in the economy of nature, and they must be productive enough to produce more food than needed only for their own reproduction. There has to be surplus plant production in order for herbivores to exist and, in turn, enough herbivores to support the carnivores.

Optimism versus reality in peak oil media battle

The optimists may have long been winning the peak oil media battle – as Matt Simmons observes – but we are beginning to see information coming out on the business pages that allows us to piece together a more balanced story.

Report: Three Forks Could Be Another Bakken

A report by the North Dakota Department of Mineral Resources indicates there may be nearly as much recoverable oil from the Three Forks formation as in the Bakken shale.

Nord Stream: the world's largest gas pipeline

The presence of Russian state-owned energy giant, Gazprom, is never far away in the streets of Moscow. The company’s ’Dreams Come True’ motto permeates the city’s billboards, magazines and television adverts. But with many countries facing an energy shortage, its influence is now also beginning to creep its way into the western corners of Europe.

Mexico eyes up to 14 oil deals by year-end

MEXICO CITY (Reuters) - Foreign energy companies could be at work in Mexico's oil sector for the first time in more than seven decades as soon as the end of 2010, a senior executive of Mexico's state oil monopoly Pemex said on Monday.

China Said to Keep Trade Embargo on Argentina Soyoil

(Bloomberg) -- China told its top state-owned grain and vegetable oil companies it will maintain a trade embargo on the imports of soybean oil from Argentina, two company executives with direct knowledge of the matter said.

Peak Oil and the Catastrophe in the Gulf of Mexico

The oil companies need to drill deep to get hold of the world’s last accessible drops of oil. In reality, it is not oil that is running out, it is the easily accessible oil that is disappearing. In Canada another desperate attempt is underway to extract oil from tar sands. Tar sands are exactly as they sound – sand and mud that contain residues of crude oil. It requires enormous resources to extract oil from the sand. Huge areas of land must be dug up, all the forest chopped down and wetlands drained. If the sand lies near the surface the mining occurs in huge open pits. If the sand lies deeper than 100 metres then chemicals and steam are required to separate out the oil. This is not just some Canadian experiment but, rather, the world’s biggest energy project. It is dirty, energy-craving and desperate. As long as the oil companies can make money doing so they will extract oil, but the more difficult it gets the more expensive the oil will become.

BP Spuds Relief Well for Oil Spill

BP today announced that work has begun to drill a relief well to intercept and isolate the oil well that is spilling oil in the US Gulf of Mexico. The drilling began at 15:00CDT (21:00BST) on Sunday May 2.

The new well, in 5,000 feet of water, is planned to intercept the existing well around 13,000 feet below the seabed and permanently seal it. The new drill site is about half a mile on the seabed from the leaking well in Mississippi Canyon block 252, and drilling is estimated to take some three months.

Shell not told to halt drilling after BP oil spill: CEO

(Reuters) - Royal Dutch Shell has not been directed to stop Gulf of Mexico oil drillings and it is too early to say what the U.S. government will do about future drillings after a BP offshore well ruptured two weeks ago, Shell's CEO said on Tuesday.

Governors of Gulf states to discuss oil spill disaster

Governors of the coastal states battling the effects of thousands of gallons of oil seeping in the Gulf of Mexico will meet Tuesday to continue discussing the disaster response.

Gov. Charlie Crist will stop at an emergency operations center in Florida's Panhandle, fly over the oil rig and then continue to Mobile, Ala.

Schwarzenegger drops offshore drilling project

Sacramento -- Gov. Arnold Schwarzenegger on Monday withdrew his support for a plan he championed to allow new offshore oil drilling off Santa Barbara County, citing the disastrous oil spill in the Gulf of Mexico.

Schwarzenegger, whose administration as recently as Friday defended the proposed Tranquillon Ridge offshore drilling project, said images of the spill in the gulf changed his mind.

Florida politicians make about-face on oil drilling

TALLAHASSEE -- The political rallying cry is no longer drill, baby, drill. It's spill, baby, spill.

Faster than oil slicks spreading on water, Florida's top politicians have spent the past few days jockeying for media attention, performing flyovers of the spill in the Gulf and decrying the impact of the calamity on the Sunshine State.

BP Gulf Oil Spill Reshaping Energy Debate in U.S. Congress

(Bloomberg) -- The oil leak spreading 5,000 barrels of crude a day in the Gulf of Mexico is reshaping the politics of the energy debate as Congress considers U.S. climate policy and lawmakers brace for the November elections.

Gulf Oil Spill Threatens to Rearrange Washington's Climate Agenda

While the full impact of the huge and spreading oil spill in the Gulf of Mexico isn't known yet, it is already creating political ripples in Washington, where energy experts, interest groups, politicians and some Capitol Hill aides see the pending legislative agenda being quickly reshuffled for a legislative response to the crisis.

Spill Is Major Energy Policy Setback, Yergin Says

(Bloomberg) -- The BP Plc oil well that’s spilling thousands of barrels of crude a day into the Gulf of Mexico may delay plans for domestic offshore drilling, according to Daniel Yergin, chairman of IHS-Cambridge Energy Research Associates.

Gulf Oil Spill Could Be Worse Than Hurricane, Landowners Say

(Bloomberg) -- BP Plc’s burgeoning oil spill in the Gulf of Mexico may hurt property owners more than any storm as sludge threatens to wreak long-term damage on the region’s most valuable asset: its environment.

“I’ve been through Hurricane Camille, Hurricane Frederick and Hurricane Katrina,” said Greg Miller, owner of Fort Morgan Realty and Development Inc. in Gulf Shores, Alabama. “They all pale in comparison to this.”

Gulf of Mexico oil spill: a Q&A

The oil spill in the Gulf of Mexico threatens to be the biggest ever. BP, the UK company that owns the ruptured well, is racing to shut off the crude that's gushing out. Here are the key questions answered.

Let's keep oil spill in perspective

Once again, many people are eager to turn a Gulf Coast catastrophe into something more apocalyptic, this time not to tear down a president but to discredit offshore drilling. It most certainly is a horrific disaster, but the "worse than Valdez" theme, hyped on the Drudge Report and cable news, hasn't been validated. Estimates of how much oil has been spilled have varied wildly, in part because satellite imaging is great at capturing the "sheen" from a spill but not so good at measuring its thickness.

Greed, negligence behind BP oil spill

The BP oil spill threatens New Orleans and the entire Gulf Coast in a way that's more insidious than Hurricane Katrina. After all, the failure of the levees and the response from the previous administration, widely criticized for incompetence and indifference, followed an act of nature: the destruction, immediate; the impact, obvious; and the pain and suffering, visible to all.

The BP disaster has only one cause: human greed, and the almost inevitable result, negligence. The immediate tragedy was that 11 people died. But the destruction that will result from BP's "crude river" will be long-term and the impact far from obvious. The "crude river" will spawn streams of suffering: economic, environmental and emotional.

Deffeyes: Blowout

There are two possible scenarios for the Gulf Coast blowout. The drilling rig had just finished running casing in the hole and pumping down cement to fill the annulus between the casing and the surrounding rock. The blowout could have taken one of two forms:

      • The density of the newly-emplaced cement was too low and natural gas bubbled up, creating an open channel through the unset cement. Making the cement denser involves adding heavy material, like the barite used in the drilling mud.

      • At the bottom of the steel casing was a casing "shoe." There are several casing shoe designs, some of them with different names. All of them include a one-way valve that allows fluids, including unset cement, to flow out of the casing into the annulus, but nothing in the annulus can flow back into the casing. My initial guess as to the cause of the Gulf Coast blowout was failure of the casing shoe. On the Internet, there are previous examples of casing shoe failures.

Oil Explorers Drill on, Unfazed by BP’s Gulf of Mexico Spill

(Bloomberg) -- Offshore oil producers such as ConocoPhillips and Anadarko Petroleum Corp. are pressing ahead with drilling even as BP Plc struggles to contain a Gulf of Mexico spill that may cost $12.5 billion to clean up.

The Gulf remains attractive to explorers because deep-water discoveries there have averaged almost four times the global average during the past decade, Frank J. Patterson, Anadarko’s vice president for international development, said yesterday at the Offshore Technology Conference in Houston.

Will the Oil Spill Change U.S. Energy Policy?

It's been a long time since we've heard the old saying that politics stops at the water's edge. When it comes to the Deepwater Horizon oil-rig wreck in the Gulf of Mexico — still spewing thousands of barrels of petroleum into the open ocean, with no clear end in sight — it hasn't taken long for politics to wade offshore.

Keep On Drilling

Oil remains the most cost-effective source of transportation fuel we have; as long as our economy is thriving, we will need to produce or import a lot of it. Global-warming alarmists and zealous proponents of alternative energy have already made the BP spill the new Exhibit A in their case against fossil fuels. In evaluating their claims, we should be mindful of the economic and environmental costs of the spill relative to those associated with their preferred alternatives.

Drill For Answers, Not Oil

While it may take months to stop the BP oil spill in the Gulf of Mexico, it's not too soon to begin asking some questions about why it happened and what can be done to minimize the chance that something like this will happen again. Thanks to The Wall Street Journal's terrific reporting last week, there are two important things we already know.

Gulf Oil Spill Is Bad, but How Bad?

Some experts have been quick to predict apocalypse, painting grim pictures of 1,000 miles of irreplaceable wetlands and beaches at risk, fisheries damaged for seasons, fragile species wiped out and a region and an industry economically crippled for years.

President Obama has called the spill “a potentially unprecedented environmental disaster.” And some scientists have suggested that the oil might hitch a ride on the loop current in the gulf, bringing havoc to the Atlantic Coast.

Yet the Deepwater Horizon blowout is not unprecedented, nor is it yet among the worst oil accidents in history. And its ultimate impact will depend on a long list of interlinked variables, including the weather, ocean currents, the properties of the oil involved and the success or failure of the frantic efforts to stanch the flow and remediate its effects.

As one expert put it, this is the first inning of a nine-inning game. No one knows the final score.

Winds holding Gulf oil spill offshore

PASS CHRISTIAN, Miss. — Some good news swept through here Monday: Winds so far are keeping most of the Gulf oil spill away from shore, and chemicals are doing a decent job dispersing the giant swath of slick crude oil looming off the coast.

BP struggles to stop Gulf of Mexico oil leak

GOLDEN MEADOW, La. (Reuters) – BP Plc pressed ahead with efforts to stop oil from continuing to spew from an offshore well that ruptured almost two weeks ago in the Gulf of Mexico off the U.S. coast as the British energy giant's shares fell further on Tuesday.

The oil company, under pressure from Washington to limit the damage, said it will try containing the crude with a massive metal, funnel-like structure. BP said it has offered the U.S. Gulf Coast states whose shores could be soiled with oil millions of dollars to move ahead with recovery projects.

Major Gulf refiners say no spill impact

NEW YORK (Reuters) - The spread of a huge oil spill in the Gulf of Mexico has raised concerns among some in the oil industry that the slick could hurt energy operations in the region.

The Buzz Is All About BP at Oil Drillers’ Conference

As always, the booths on opening day offered lots of cappuccino. But the buzz this year was really coming from the steady stream of news about the BP-leased platform, the Deepwater Horizon, which sank in a fiery blaze in the Gulf of Mexico last month, leaving 11 men missing and presumed dead.

Exhibitors and visitors alike traded perspectives on a possible halt to new offshore drilling, new regulatory red tape and all the bad publicity that would inevitably affect the oil business.

Underwater Robots Probe ‘Inner Space’ to Plug Leaking Oil Well

(Bloomberg) -- Pilots using jetfighter-like joy sticks and computer screens to guide robots a mile underwater are crucial to BP Plc’s efforts to stop a leaking oil well that’s gushing thousands of barrels a day in the Gulf of Mexico.

Burning the Oil Off? Weather Is the Hitch

While a controlled burn of petroleum in the Gulf of Mexico was judged successful last week, wind and rain have hampered efforts to conduct additional ones to contain the spill.

Gulfport-Biloxi, Miss.: Area hit by Katrina faces oil spill worries

The Gulfport-Biloxi, Miss., housing market — not fully recovered from the devastating effects of Hurricane Katrina five years ago — awaits an uncertain future as a massive oil spill threatens the Gulf Coast.

Wildlife at risk: How you can help in wake of oil spill

Want to know how you can help the wildlife threatened along the Alabama, Mississippi, Louisiana and Florida coastlines by the advancing oil slick?

At the heart of oil spill, 11 grieving families

Had it been a plane crash or a tornado strike, grieving families and friends could at least to go the place where their loved ones died. They could lay a wreath and pray.

Not so with this disaster. The Deepwater Horizon oil rig was 50 miles south of the Louisiana coast. Because it exploded and burned - and is now a veritable underwater volcano of toxic, oily sludge - the final resting place of those 11 victims is a watery, inaccessible grave.

Why can't oil companies clean up after themselves?

For two weeks, the combined resources of British oil giant BP and the U.S. government haven't been enough to contain the growing oil slick from a damaged well 5,000 feet below the surface of the Gulf of Mexico. That — and BP's inability to cap the out-of-control well — make a mockery of the company's glib, pre-drilling assurances that it could handle any accident, which it deemed highly unlikely.

Unprecedented response

Although an incident like this hasn't occurred in the United States in more than 40 years, it is clear we need to find out what happened and quickly fix any problems. Our industry recognizes that obligation. Our goal is zero incidents, zero injuries and zero fatalities. We owe it to the nation that has placed its trust in us to responsibly develop the oil and natural gas off our coasts.

Oil falls below $85 on stronger dollar, supplies

Oil prices slumped to below $85 a barrel Tuesday as the dollar strengthened and traders anticipated another increase in U.S. crude supplies from a government report due later this week.

Urals Discount Widens as Russia Boosts Output

(Bloomberg) -- Russian and Mexican crudes are trading at growing discounts to U.S. and U.K. oil benchmarks as production by nations outside OPEC reaches a record.

Pemex May Boost Production by 2013, Morales Says

(Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, may increase output to as much as 2.8 million barrels a day by 2013, said the head of the exploration and production unit.

Ku-Maloob-Zaap, Mexico’s largest oil project, will keep producing about 850,000 barrels a day “for the next two or three years,” Carlos Morales told reporters today in Mexico City, where Pemex is based.

Q+A: Wealthy Ambani brothers brace for gas row ruling

MUMBAI (Reuters) - The Supreme Court is expected to rule by next week on a long and high-profile dispute between the estranged billionaire Ambani brothers that has unnerved investors unsure about India's future gas pricing policy.

Oil India, Indian Oil Withdraw Offer for Gulfsands

(Bloomberg) -- Oil India Ltd. and Indian Oil Corp. withdrew their joint offer for Gulfsands Petroleum Plc, after failing to get a response to do due diligence on the U.K. explorer with assets in Syria.

Statoil to supply shale gas to Canada

Norwegian giant Statoil has seal a deal to pipe gas from the northern Marcellus shale play, in Pennsylvania, to Niagara on the US border with Canada.

Ethylene Profit May Fall as Exxon, Sabic Add Capacity

(Bloomberg) -- Profits from turning petroleum into chemicals used in shirts, tires and plastics may fall as Exxon Mobil Corp., Royal Dutch Shell Plc and Saudi Basic Industries Corp. add capacity faster than demand increases.

Centennial Says Supply of Steelmaking Coal ‘Fragile’

(Bloomberg) -- Centennial Coal Co., an Australian producer of coal used in steelmaking, says global supply remains “fragile” and predicted contract prices will rise in the second quarter.

Japanese steel mills in March agreed to pay BHP Billiton Ltd., Rio Tinto Group and Teck Resources Ltd. about $200 a metric ton for a three-month coking coal contract starting April 1. That’s a 55 percent increase on the contract for the year ending March 31, UBS AG said in a March 18 note.

Newcastle Weekly Exports Rise 9%; Ship Queue Shortens

(Bloomberg) -- Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel used in power stations, rose 9 percent last week while the number of vessels waiting to load decreased.

U.S. Citizen From Pakistan Due in Court on New York Bomb Plot

(Bloomberg) -- A U.S. citizen of Pakistani origins is due in a New York court today to face charges over the attempted car bombing in Times Square on May 1.

Trucks drive 20% increase in April vehicle sales

Sales of new cars and trucks last month zoomed nearly 20% from year-ago levels, but the pace lagged behind discount-fueled March, delivering an uncertain verdict on the auto recovery's strength.

Perhaps most striking was that trucks — a category that includes pickups, minivans, SUVs and cargo vans — powered April's boom. Truck sales rose 23.2% vs. only 16.8% for cars, Autodata reports.

Grant To Bolster Glastonbury's Use Of Natural Gas Vehicles

GLASTONBURY — — The town has secured a $490,000 grant from the U.S. Department of Energy that will be used to bolster the town's fleet of natural gas-powered vehicles and build a fast-fill station for the cars and vans.

Green Jobs Slowly Ticking Upward

The green economy is growing, but slowly.

That’s according to a report released by the Economics and Statistics Administration, a division of the Department of Commerce. Green services and businesses amounted to just 1 to 2 percent of the private business economy in 2007. And there were 1.8 million to 2.4 million green jobs in 2007, less than 2 percent of the total work force.

For Tire Recyclers, a Holy Grail

A company says it has found a way to recycle tires affordably through pyrolysis - a process in which tires are subjected to heat in an oxygen-starved environment and converted to gas, oil and carbon char.

U.S. Farmers Cope With Roundup-Resistant Weeds

DYERSBURG, Tenn. — For 15 years, Eddie Anderson, a farmer, has been a strict adherent of no-till agriculture, an environmentally friendly technique that all but eliminates plowing to curb erosion and the harmful runoff of fertilizers and pesticides.

But not this year.

On a recent afternoon here, Mr. Anderson watched as tractors crisscrossed a rolling field — plowing and mixing herbicides into the soil to kill weeds where soybeans will soon be planted.

Just as the heavy use of antibiotics contributed to the rise of drug-resistant supergerms, American farmers’ near-ubiquitous use of the weedkiller Roundup has led to the rapid growth of tenacious new superweeds.

Wheat Declines Amid Speculation Oil Slick Will Hamper Exports

(Bloomberg) -- Wheat fell for a second day in Chicago on speculation that an oil spill in the Gulf of Mexico will hamper U.S. grain exports and depress domestic prices.

Why do peak oilers and climate changers not get along better?

I had an interesting experience this morning at a presentation by Robert Hirsch (oil industry vet, now a consultant, author of famed Hirsch Report) on peak oil. It was pretty familiar stuff to anyone who's followed the issue: oil production is going to head into inexorable decline in the next few years, oil prices will spike, electrification won't be fast enough to replace liquid fuels, and the only near-term options are coal-to-liquids, tar sands, and to a lesser extent, efficiency.

Afterwards I asked him about climate change, which he hadn't mentioned in his presentation. I noted that all his short-term mitigation options involve increasing CO2 emissions, despite the fact that scientists are recommending U.S. emissions fall to effectively zero by 2050.

He said, basically, that people and their suffering matter more to him than the climate.

Climate science a ‘contact sport’

In the midst of last fall’s global warming scandal known as Climategate, Stephen Schneider released his book “Science as a Contact Sport: Inside the Battle to Save Earth’s Climate.”

...The controversy couldn’t have highlighted Schneider’s message better: Science is a brutal sport that comes with harder blows than football.

“It is more like hockey with no rules and no refs and you want to sharpen the blade and hit someone in the head,” Schneider said in an interview Monday morning before speaking to a full crowd at the Gridiron Room in Kansas University’s Burge Union.

Germany: Climate meeting "broke the ice"

KOENIGSWINTER, Germany – Some 40 nations at a high-level climate meeting have made headway toward a pact to curb global warming, but the most important issues remain unresolved, Germany's environment minister said Tuesday.

Limiting Global Warming: Variety of Efforts Needed Ranging from 'Herculean' to the Readily Actionable, Scientists Say

In a paper appearing May 3 in the Proceedings of the National Academy of Sciences (PNAS), Veerabhadran Ramanathan and Yangyang Xu, climate researchers at Scripps Institution of Oceanography, UC San Diego, have identified three avenues by which those countries can avoid reaching the warming threshold, a point beyond which many scientists believe climate change will present unmanageable negative consequences for society.

Of course, all of us here have seen pictures of the gusher at Spindletop. From what I can find, this geyser lasted for nine days and pumped out about 100,000 barrels a day. I was unable to find out if they were able to cap off the well at the end of this time, or if the pressure simply depleted before they could get control.

A small lake of oil formed around the well, which was eventually torched by the sparks from a locomotive passing along nearby railroad tracks.

So can Spindletop give us any ideas of how long the Horizon blowout may go on, or are the differences in the two situations so far apart that any comparisons are meaningless.

Also, from what I can find, it seems that burning the Horizon oil is difficult, while the Spindletop stuff was so flammable that a mere spark from a train's locomotive (coal fired in those days) could set it off. Looking at Spindletop, it would seem that BP could burn off the entirety of the oil floating on the surface simply by tossing a lit match in it, but apparently this won't work.

So does Spindletop have any information to offer us?

Antoinetta III

Antoinetta -- Each incident is obviously unique. More importnatly, the geology and reservoir engineering are equally unique. I one can't project parallels between two wells sitting a couple of thousands of feet apart producing from the same formation at the same time then jumping 800 miles and almost 100 years will be a bit more difficult.

Don't mean to sound patronozing but remember the Spindletop lake was oil. The spill from the BP blow out is a mixture of oil and water. Sorta like trying to set a wet paper bag on fire. Can be done but not very easily.

A side trivia note: In a couple of weeks I'll be drilling a well deep below the original discovery at Spindletop. And trust me: we'll do all we can to prevent another gusher blowing through the top of the drilling rig.

Thanks, Rockman, but just one question. I have always heard that "oil and water don't mix." I thought the oil floated on top of the water, so how does it mix, and does it stay mixed, or does it separate out over time?

Antoinetta III

Actually they do mix and it's not an uncommon problem when dealing with oil wells with a water cut. It's called an emulsion and requires a good bit of effort and certain chemicals to break this emulsion. This is also a major problem with the spill recovery effort in the GOM: they can't just suck up only the oil. They suck up lots of water in the process thus making it much less efficient.

It should be noted that the drum skimmers that I see being used to skim oil off of the surface of the ocean don't suck up anything. Sorry that I'm linking you to a video that's intended to be a commercial, but it was the first one I found, and it well illustrates how drum skimmers work. http://www.youtube.com/watch?v=idD5lLZZut0

I'm still bothered by the idea of setting a dome over the drill string. That's how I hear it being explained, but it doesn't make much sense to me. I envision cutting off the drill string at the top of the well head and placing the dome over that. Is everyone mistaken in thinking that that first dome is going to be placed over the drill string?

Mayonnaise is a good example of an emulsion of oil and water. When I blew a head gasket years ago (mixing radiator water into the engine oil) and pulled the dipstick, that's exactly what it looked like: a thick, creamy goo.

As mentioned above the OTC (Offshore Technology Conference) is running M-W this week in Houston. Obviously a much hotter ticket then usually. As I handle drilling ops for my company I have almost unlimited access to free passes from my subcontractors. Thus I've been hit on by everyone that knows this. It's very easy to envision everyone hanging around the BOP provider booths as and the well control guys. Think of it as a wake with an open bar. There should be a lot of media coverage and countless opinions offered.

I won't be attending.

I read that they expected 69,000 attendees.

I wonder how many make a living off GOM industry??

Must be close to a million.


Hey Rockman -

So how is the idea of PO received by others you are in contact with in the biz (i.e. your subs etc.) - is there a general awareness, general panic, general "who cares" type attitude ? Or are most so focused on their own part in the current act that they don't much know about the overall state of the theater ?

Just curious because I'd have figured that you must have some pretty interesting discussions with them over a beer every so often...


Cat -- Surpise: we don't spend anytime discussing PO. It is very old news to us. It was readily acknowledged 30 some years ago when I started. But we've never called it "PO". Still don't except when I'm hanging out at TOD. It was always the "reserve replacement problem": the more you produce the more you need to find to replace your production. And that's been the day to day struggle since I started. But don't confuse what the rank and file thinks about PO with what the PR guys put out. We obviously exist in two very different worlds.

I've been working in the oil industry for 26 years, and have been aware of Peak Oil for about the last five.
My take on the industry is that the vast majority are unaware, and of those that have heard of it, they think it's mostly a bunch of hooey.

I have asked the opinion of several few industry professionals, and for those that have heard of Peak Oil, with rare exception, they seem to think that "Peak Oil" means that we are saying that production will stop one of these days because the oil will run out. Of course no one is saying this, but it just goes to show what erroneous perceptions there are out there.

I have had a nice peak oil poster on my wall for a number of years, and few if any of the dozen or so people I have pointed it out to have had any idea about it.

Rockman's comment about "reserve replacement" is relevant - the whole idea gets a better reception when it is called something else.

I think you hit it on the head picco. PO, to the indusrty, has at best an unknown meaning and at worse is relegated to the tin hat wearing crowd. I never ever use the term PO in front of my cohorts.

"Peak Oil" means that we are saying that production will stop one of these days because the oil will run out.

Yes, that is the general perception - and is kind of funny. When we say athlete X is at his peak, nobody thinks he is going to stop playing next week !

Around 1998 I went as a recruiter to a job fair at the University of Texas, Austin. We were hiring Computer Science / Electrical Engineering students, but I met a lot more Petroleum Engineers there! The recruiting tables were on one side of the hall and it seemed like most of the students walked along the other side of the hall, not wanting to get too close to those odd industry people. So I just stood on the opposite side of the hall from my table. Students would stand next to me staring at the table. I would then ask them, "Any idea what that company does?"

I quizzed quite a few petroleum engineering students - master's and PhD candidates about to graduate. Lots of cool research about finding oil and extracting it. But when I started asking questions about e.g. the total number of barrels that the industry had extracted since it began in the nineteenth century, nobody had any idea - they all looked surprised at the question. Simply not something that had ever come up before for them.

Aw shucks. I was hoping you would go and ask some questions for us. Browsing the technical program is interesting:


BP is/was planning on touting their success with Thunderhorse and Atlantis. As discussed here, the former hasn't produced up to expectations, and some questions have been raised about the latter:


Here are some quotes from the OTC:


"I was looking forward to this day with a lot of pride and excitement," Simon Todd, who heads BP's Thunder Horse deepwater development in the Gulf of Mexico, told attendants at the Offshore Technology Conference, which started Monday. "That anticipation has become totally overwhelmed" by concern about the explosion and sinking two weeks ago of the Deepwater Horizon, a Transocean Ltd. (RIG) drilling rig that was finishing a BP exploration well.


Until recently, the Thunder Horse platform illustrated both BP's apparent bad luck and the steep challenges presented by deepwater energy production. In 2005, the platform, then under construction, was found listing after the passage of a hurricane, the result of defects in its ballast system. Later, problems with subsea infrastructure at the field and at another BP development, Atlantis, caused a two-year delay in the start-up of the projects. But after Atlantis began production in October 2007 and Thunder Horse started up in June 2008, both fields began to contribute "a large proportion of our oil production in the Gulf of Mexico," making BP the largest producer there, Todd said.

Jackie Mutschler, Vice President of Exploration and Production Technology at BP America, kicked off the BP session about Thunder Horse and Atlantis by calling for a minute of silence for the 11 crew members lost from Deepwater Horizon, which burned and sank.
A special luncheon featuring BP chief of exploration Andy Inglis was canceled, and so was a safety-awards luncheon hosted by the U.S. Minerals Management Service, the federal agency that oversees offshore oil and gas development and is now investigating the incident and helping respond to the spill. Also, experts from companies operating across the Gulf were helping BP deal with the spill. "The intellectual power and experience of our industry is focused on solving this problem," Mutschler said.

joules -- I doubt I could have gotten close to the BP booth with all the media there. And I can promise you I would not have gotten any questioned answered. Every word coming out of the mouth of anyone at BP right now is being filtered through a lawyer.

I have listened to their spokespeople, and believe me, no one from BP says a thing without clearance and a script!

I will probably be working on something related to this within a few months at the most. It's a lawyer's dream.


I will probably be working on something related to this within a few months at the most. It's a lawyer's dream.

Perhaps you'd like to use this in your closing arguments... by special request



This is a really interesting article. Exponential growth, and the perils therein will not be news to most people on TOD, but what I found very insightful was the assertion that the 'physical economy' can not support the 'financial economy'. I vaguely remember Nate Hagens posting something similar to this a while back too.

When one stops to think about it the financial economy (and its main abetter, the fiat monetary system) only derive meaning and substance from the physical economy, which is to say the physical resources of the planet. Very interesting to hear this espoused thus.

You might like all of this guys stuff.


UK fish stocks devastated.


Now I likes a fishy on my dishy the same as the next bloke, but perhaps we should stop eating them for a few years and give them a chance to catch up. Either that or perhaps the price needs to be allowed to rise as the 'free market theory' should dictate. It won't because the fishermen are obliged to sell their catch to the supermarkets which in effect form an oligopoly and dictate the prize to satisfy their customers. Now many moons ago fish was a treat, especially if one lived more than a day's travel from the coast. So back then the average punter would not eat so much fish. The supermarkets profit but the fisherman are screwed. That's free markets for you! The Supermarkets buy up all the smaller shops and force out the competition and then dictate the price. And the fish stocks suffer. Wonderful!

Report: Three Forks Could Be Another Bakken

(Three Forks) + (Bakken) = (4 billion barrels recoverable oil total) / (30 to 40 years production) = 100 million barrels/year ???

Very good for North Dakota (as long as our oil-based civilization lasts).

Statistically insignificant for the US as a whole?

I did a TOD post about the Bakken a few months ago, and compared it to US needs.

Here's an excerpt: "The EIA estimates that US oil consumption in 2008 was equivalent to 17.8 million barrels per day, declining from a high of 19.4 million barrels per day in 2005. US production continued its long slow decline to a level of 6.7 million barrels per day (including natural gas liquids). Bakken production in 2008 averaged about 118,000 barrels, or about 1.8% of US domestic production, and about 0.7% of US consumption. The Bakken displaced about 1.1% of the US net 2008 imports of 11.1 million barrels per day." See Figure 15 in the post.

A similar conclusion could be drawn about the Three Forks - lots of Oil in Place, but it will not have a very big effect compared to current US consumption.



three forks could be same bakken

the ndic, north dakota industrial commission, considers the bakken and three forks as a common pool. the ndic has taken a lot of criticism from industry for this, it apparently hinders their efforts to inflate stock prices.

a recent study by one of the players, clr (continental resources - not calcium lime and rust), reported that a three forks wellbore immediately below the middle bakken showed no communication during the frac' of the middle bakken. "no communication", but the three forks well was filled up with fracin' sand. early production from the three forks in middle bakken developed areas, namely the parshall field, is not impressive and possibly because of communication between the two. the main field operator, eog, has gone to offsetting the three forks and middle bakken wellbores by 1/8 mile.

evidence from other areas, however, seems to indicate that the two act as separate reservoirs.

the bottom line, imo, the three forks contains additional oil in place. i don't doubt that some additional oil can be recovered by drilling a separate three forks wellbore - but doubling already inflated by a factor of two reserves, fantacy.

the public traded companies want us to believe that they can calculate urr's volumetrically while performance data suggests a rough rule of thumb of half the claimed urrs. so regardless of the estimated oil in place, time will tell how much can be recovered.

The spill/leak/volcano is absolutely horrible and clearly and graphically demonstrates the dangers of off shore drilling. It also gives rise to stories about the disastrous impacts of other technologies such as oil sand extraction. Politicians, including the Governator are turning around their support of offshore drilling on a dime. All good.

Decisions to stop or slow down off shore drilling will still be seen as unacceptable since it will reduce the amount of oil required to run our God given way of life. After all, recent truck sales have actually increased more than car sales. So much for cash for clunkers and the idea of peak demand. Peak demand, apparently, doesn't apply to all those people who bought the trucks and the SUVs. Peak demand apparently doesn't apply to all the people I see around here who drive their SUVs all over the damn place in a location that hasn't seen snow in about 30 years and is not likely to see it again, ever.

Yes, maybe, with enough drilling everywhere regardless of the consequences, maybe we can delay the downward oil descent a few months or maybe a few years. What people still don't get is that off shore drilling does not even come close to solving the peak oil problem. It is like O lord, give me one more cigarette before I quit. I know how that feels, being a former chain smoker.

And when, pray tell, will we just bite the bullet and start the crash program to do everything that we can possibly conceive to address our oil use in particular and our energy use in general.

But O Lordie, deliver me from temptation, but just not now. Yes, it is like an addiction, in the sense that we are emotionally incapable of planning beyond the next oil find that is promised to solve all of our problems, for now.

Sorry to repeat myself, but I still believe that some of the best minds anywhere post on this site and could very quickly come up with at least a hundred ways that we could address this problem.

And if we decide to quit offshore or cut back dramatically, the good news is that the oil will still be there in the future, especially the oil that hasn't been wasted through oil leaks. To say we must get the oil now because we may be incapable of getting it in the future is just an admission of how desperate things have become.

Oh my God, we are running out of oil. So let us use it up as fast as we can.


Dow down 230 pts so far today!

This is hilarious stuff, that is if you're not investing in equities, like I'm not. On Sunday night I posted a pre-market estimate of Monday morning's dow, nasdaq & s&p which showed the Dow going down 175 pts. But not 10 minutes later it was updated to show it was actually going to go up about 44. Well it ended up 123 or something like that, but today its down 230 so far. Now maybe by the closing bell it will be up 150 pts. How do people stay calm invested in something so volatile?

And by the way, the only reason I follow the Dow, is because it does act as an indicator of how investors think the economy is doing, and that relates to oil price to some extent. For example, when the Dow dropped from 14+K down to 7+k oil also dropped from 147 to 33.

And to illustrate my point, with the dow down 230, oil is down 3.00 bucks! http://www.oil-price.net/

I can't understand why the EU doesn't just cut Greece loose to have their own currency. That way Greece can print as much of it as they want, like Bernanke does for us. Hey, if you need some cash just start printing more. It doesn't need to be tied to anything of value anymore, like gold or silver, so just have some fun and use as much as you please.

And, apparently, the news that further offshore drilling as proposed by Obama is "dead on arrival" has had no impact on the downward price for oil. But far be it from me to try to explain the daily change in the price of oil.

Seems like it is time for another bursting of the stock market bubble. But then I have been saying that for months. Still waiting and sure I will be right eventually. Just like a stopped clock.

All off shore drilling is off.
IT could be years before new drilling is resumed.
The U.S. should stop all oil imports and see how long it takes to cripple the country.
My guess is about 5 days.

Perk Earl, have you ever considered changing your name to Peek Early? After Sunday night's prognostications, you're beginning to sound spooky enough to go on television ;-)

I like to watch the Dow too, for several reasons.

But I also like the "Market Summary":

Today's Picture: "The Red Sea"


Keep an eye out for Moses, and bolt as soon as he parts the waters ;)

At one point I saw it was down over 280 points and trending further downward - but obviously that was more than the market handlers could take - if you start having 300 point drops it puts a serious crimp in all your economic "recovery" talk... and, like clockwork, the plunge protection team worked their magic... Voila ! - checked back a few minutes later and it was magically only down a bit over 200 points...

Dow way down, and yet, BP is up over 1.5%

Final for the day: -225.06.


Re: U.S. Farmers Cope With Roundup-Resistant Weeds

“It is the single largest threat to production agriculture that we have ever seen,” said Andrew Wargo III, the president of the Arkansas Association of Conservation Districts."

I wonder where he would rank Peak Oil productino in terms of threats to modern agrictultural production?

Maybe they should sue Monsanto. Who knew? Spray the crap out of weeds for years and don't expect any resistance because, as we all know, when it comes to Monsanto, resistance is futile.

Spray the crap out of weeds for years and don't expect any resistance

I like the academic in the article describing what is happening as evolution in overdrive. I always find it quite amazing that in the rural farming bible belt that evolution is given no credence whatsoever by most people. How do you maintain such a belief living in an environment in which evidence for evolution is seen almost daily? I removed my Darwin fish off my car trunk lid shortly before I started looking for property in rural Illinois. Later opinions of local residents about evolution and their intolerance to “insidious” ideas confirmed the wisdom of that move.

Broadacre cropping is up against
- herbicide resistant weeds
- expensive diesel
- expensive NPK
but that's where a lot of our daily calories originate. An alternative is to grow plants in furrows or ridges that can be blade weeded behind low power tractors, perhaps running on compressed gas. We could use more sewage sludge instead of NPK. However this won't work on the millions of acres of prairie or rangelands that need big machines and cheap inputs.

Maybe we could eat potatoes instead of breakfast cereal, bread and pasta. Meat animals would have to be fed on grass not grain. Fried chicken will be be lean and chewy since the chicken never ate corn or wheat.

this won't work on the millions of acres

It can work for millions of acres. In the United States around 1850 (just before the first chemical fertilizer became widely available) there was 300 million acres under cultivation. Around half of the cultivated land was devoted to producing animal feed, and we supported a total population of 23 million, two-thirds on farms, with the rest. The only fertilizer available was manure, guano, and lime. Guano and lime cost, but every farm had manure sources on it. The key difference being that the typical farm back then was 200 acres, not 20,000.

Manure based farming works, and works well, but it requires small family farms.

It doesn't require small family farms , it just requires mixed farms (stock + crops) rather than monocultures. This can happen at small or large scale, and like most farming is likely more efficient at large scale.

However, it is not as simple as that, manure is just recycling some of the nutrients that were taken out of the ground. If the animals are used for meat,(or milk) then a certain amount of nutrients leave with them.

Another key difference is that the yields were much lower back then, going back to manure based farming will dramatically cut yields. Just look at organic farmers, their yields are often half - two thirds of normal. Of course, their produce is often much better quality, but there is definitely less of it per acre.

And that is the problem about sustainable farming in the absence of fertilisers - the production must come down.

Ultimately though, farming is actually one of the best uses we have for fossil fuels, there is amazing productivity (product per acre) achieved through their use, with minimal labour input. As we have less oil to go around, there are many, many other places to cut back before farming. And if really needs be, farms can grow all of their own fuel. The amount of ethanol produced today is equivalent to the fuel used for all agriculture in the US (though not for food transport, processing and storage)

Everybody in farm country who actually farms and has an iq over 100 seems to understand evolution well enough on the small scale when you talk to them privately, and keep religion out of the discussion, which I admit is hard to do.

More of them than you would ever believe understand it on the grand scale too, but they won't talk about it, publicly.My liberal buddies refuse to talk about the grimmer side of porous borders,publicly. In private they admit that a heck of a lot of very poorly educated Americans would be employed if there were not so many illegals around. My redneck republican buddies understand but refuse to discuss (publicly) the fact that we simply must have a lot of intrusive and heavy handed bueracracies in place to simply survive these days.

Farmers and country people , and religious people in general in my estimation, are niether more nor less subject to cognitive dissonance than the rest of the population in general.

Up thread somewhere in the last day or two is a comment about newly graduating PETROLEUM ENGINEERS not knowing diddly about depletion;and we all know about the economists who hold university chairs, and policy making positions at megabanks and in govt, who do not believe in ( "are ignorant of " might be a better way to express this) the basic laws of biology;they believe infinite growth is possible in a finite , energy limited -er wait a minute, they don't believe in energy limits either-well, everybody CAPABLE of getting my point should have gotten it by now.

I remember very well my maternal grandfather telling me about his experiences with ddt.When he first used it around a cow barn "You wouldn't see a fly for a month.Then you would see one light on the wall , and in a minute it would be kicking on the ground trying to take off, and it would be dead in a few minutes."

At the time this story was related to me, personally, we still had ddt, and you could actually dip a fly in a ddt solution with no apparent ill effect, unless you held him under long enough to drown.

We have seen many insectidides over the years come and go, due to evolved resistance, and there is no reason to think things should turn out differently with weed killers.

The only real difference is that it will take longer because weeds can't reproduce as fast as insects, which have much shorter generation times and are capable of moving around under thier own power.

Even human beings occasionally exhibit immunities or tolerances to pathogens and poisons which can be passed on genetically;there are a few people who are naturally resistant to aids, and if aids gets everybody else, thier offspring will inherit the earth.But due to our long generation time, and the paltry number of births possible per woman, it will take hundreds of years for the necessary genes to spread very far.

Therefore we are not generally personally able to watch evolution in action on our own species in real time, the way I have watched various orchard pests become resistant to one poison after another since I
was a kid.

We used and discarded as no longer effective at least four different miticides between the late fifties and the late nineties on our place, just trying to control a little fella about ads big as a pin head known as a red mite to apple growers..

The ability to digest milk as an adult is probably the result of some lucky combination of genes that occcured several thousand years back among herding peoples;there are plenty of people who must and do look on milk as a poison , since they do not possess the genetic background needed to drink it.

There is a very good possibility that new herbicides, or herbicide cocktails, will save no till farming.Given current realities,let us pray that this comes to pass, as no till conserves water, soil, fertilizer, fuel, and machinery.

( It also conserves considerable amounts of labor but I suppose later on this will not matter very much..)

The tradeoffs are good ones, and in the short term , and in the medium term,it's either bau ag or starvation.There is not a snowballs chance on a red hot stove that we can transition to small scale local low input agriculture in the near future.The technical problems involved are enormous but manageable in principle and practice, if we are willing to accept the trade offs.

The economic, political, and cultural problems involved are not solvableunless and until we suffer a crash sufficient to force the solutuions on us.These problems are simply a subset of the lkarger energy population super problem, which is unsolveable for the same reasons.

By the time the early stages of the crash convince us that change on the grand scale is mandatory, we MAY HAVE PASSED the point where we are ABLE to implement the necessary changes.


I am still of the opinion however that at least here in the US WE CAN KEEP BAU AGRICULTURE alive long enough to make the forced transition to a low energy economy, or until renewables can shoulder the ( much reduced) load.. We need not starve, unless from a lack of income or welfare,in the waealthier parts of the world with adequate farmland and some local energy sources.

their yields are often half - two thirds of normal.

What is "normal"? Dumping chemicals on the ground?

It doesn't require small family farms , it just requires mixed farms

Forgive me, I forgot to specify an assumption. Shame on me. In the example I gave, there is an assumption of no tractors at all, everything done by manual labor. There is a limit to how many acres one person can cultivate entirely by hand, without machine help. Of course, they did find a way around that problem in the past- through the use of involuntary labor.

Another key difference is that the yields were much lower back then

Absolutely. If you divide out the numbers from 1850, you come up with 6 acres to support one person, as opposed to 2 acres now.

their yields are often half - two thirds of normal

Depends on which direction you choose to view it from. One could also say the organic yield is the "normal", and chemical fertilizers artificially inflate it. Point well taken, though. No matter which way you look at it, the tonnage of yield would indeed be less. This is one of those things that needs to be planned for in advance, or the change in harvest size becomes a disaster.

Back then and still today we monoculture ourselves into disaster.

If I were planting a farm I would put as many different types of plants on my land as possible, each area has a set number of food plants that can be grown there, so each farm would have different sets of plants than another. But the result is that one disaster won't kill your yeilds altogether, unless it is a massive system wide thing like a hail storm levels everything, or the like. Weeds and pests can only take out so much before they stop being an influence overall.

If you have say 30 or 100 different food plants growing you surely will have something to eat at harvest time. What gets us is this need for a monoculture system. There are things that need to change, the factory nature of farming and how we only use one crop in a given area. How we ship and sell plants and food from them has to change, until then all we are doing is feeding the machine.

We have basically developed ourselves into a corner, and to get out, we have to break down a wall and go outside the box we find ourselves in.

BioWebScape designs for a better fed and housed future.

PS, No it won't be easy, but it'll have to happen or else we die off in droves.

I suspect it also requires small populations.

23 million is less than a tenth of the current US population.

I guess you would expect the president of the Arkansas Association of Conservation Districts to have a name like "Andrew Wargo III". And what are they conserving, exactly?

I'm no expert here, but I think they are conserving the good ol' unsustainable habits, so that everything stays as it is (read: BAU). :P

Mexico's Pemex to issue $6.3 bln more debt in 2010

MEXICO CITY (Reuters) - Mexico's state oil monopoly Pemex expects to borrow another $6.3 billion this year to fund its capital investments and refinance existing debts.

Is Pemex setting itself up to hit a wall with increased borrowing/refinancing while its oil production and oil export income keep going down?

One wonders who would be willing to buy the bonds.

Why do peak oilers and climate changers not get along better?

Thanks for linking to this interesting article. Probably more overlap than the title implies though.

Robert Hirsch was unimpressed with climate models. The paleo and current-day climate data makes a more compelling case anyway.

I also thought that was an interesting article. I would suppose by the content I see on this board, the climate change and peak oilers pretty much overlay.

Hirsch I think is a reservoir engineer, alot of people in the peak oil prediction business are geologists and reservoir engineers, oil business trained.

When you go out into a cornfield in Illinois and drill through 3,000' of deepwater marine limestone, you have a different perspective on rising and falling sea levels, and earth's changes. You mind is always half a mile under the ground and events that are hundreds of millions of years old, with transgressive and regressive shorelines, sandstones, shales and limestones and coals..... you see the earth as dynamic,ever changing.

An engineer is always involved in assessing economic alternatives, Maximizing Net Present Value and thereby creating or preserving wealth. Quantifying the impact of investments. Putting capital to its immediate best quantifiable use.


Taking the long view, oil will be back. So why worry about peak oil or climate change. Taking the really long view, the sun will go out. So, what me worry. Time for a new puddle.

When you go out into a cornfield in Illinois and drill through 3,000' of deepwater marine limestone, you have a different perspective on rising and falling sea levels, and earth's changes. You mind is always half a mile under the ground and events that are hundreds of millions of years old, with transgressive and regressive shorelines, sandstones, shales and limestones and coals..... you see the earth as dynamic,ever changing.

Blasphemy! You can't reconcile that with the fact that the earth is flat and only six thousand years old! I imagine next you'll be telling people that Round Up weed killer creates selection pressures the steer weed evolution towards resistant weeds.

I pity your soul...

The guy got Heinberg wrong, though. He is very GW aware.

Yep, Heinberg discusses it often.

"Why do peak oilers and climate changers not get along better?"

That is just too easy...as I have posted before, if the climate change models are correct and broadly accepted by governments around the world, peak oil becomes a bore, yesterday's news.

Think of it this way...what good would it do to find another Saudi Arabia if using it means the death of the planet? The peak oil problem sinks into obscurity IF (and that is the big IF) you accept climate change. I have always believed that most of the second half of the oil still out in the world will become, for all practical purposes, illegal to use...and it may happen sooner than many folks believe.


And to put the boot on the other foot,

if peak fossil fuels are an imminent crisis, then why worry about climate change models that use exponentially growing human CO2 emissions as their input data? We are in all probability going to cut global human CO2 emissions without any political input. Not enough to prevent damaging climate change, but enough to take the wind out of the sails of many campaigners. It is not a message they want to hear.

Indeed ... the Australian Government has just released an Inter-Generational Report (dealing with immigration, population, ageing, infrastructure, etc) that projects annual growth of 2.7% until 2050. Not certain peak oil (or peak anything) got a look-in amongst the BAU+Infinite Growth assumptions.

I could not disagree more.

Think of it this way...what good would it do to find another Saudi Arabia if using it means the death of the planet?

I don't see how that's an issue at all. Peak oilers don't believe we'll find another Saudi Arabia, and if we did, we would use it, regardless of the impact on the planet.

And I don't believe peak oil means peak emissions. There's still coal, wood, PVC pipe "salvaged" from abandoned McMansions, etc.

Your argument might make sense if you were trying to explain why big oil resists peak oil. They're the ones trying to find a new Saudi Arabia. Neither peak oilers nor climate change activists are trying to do that.

So Leanan, let us say I accept your argument...then why would anyone spend anytime looking at oil production charts, descent scenarios, prospects for off shore oil, prospects for shale oil or heavy oil, prospects for tar sands, prospects for coal or "peak coal" or any other topic that talks about whether we will have enough oil for the future?

Any oil or in fact any carbon based fuel for the future would be regarded as TOO MUCH. The climate change scenario is in its essential argument saying that there is only one catastrophe greater than there not be enough fossil fuel, and that is if there is enough.

This means the "peak oil" argument is for all practical purposes over. It simply does not matter how much oil may still be in the ground, and the more affordable the oil (or any carbon based fuel) the greater the coming catastrophe, because there would little incentive not to use it...EXCEPT Climate change.

Think of it this way: If you are a true believer in climate change, then peak oil or peak of any carbon based fuel is your dream come true!

One wonders why climate change believers and peak oilers don't get along better? Because Colin Campbell's worst nightmare would be James Hansen's greatest dream!


then why would anyone spend anytime looking at oil production charts, descent scenarios, prospects for off shore oil, prospects for shale oil or heavy oil, prospects for tar sands, prospects for coal or "peak coal" or any other topic that talks about whether we will have enough oil for the future?

Oddly enough, I do that, even though I think climate change may be a far greater catastrophe than peak oil.

Any oil or in fact any carbon based fuel for the future would be regarded as TOO MUCH. The climate change scenario is in its essential argument saying that there is only one catastrophe greater than there not be enough fossil fuel, and that is if there is enough.

Whether it's too much or not doesn't enter into it. We may already have "too much." That doesn't mean peak oil doesn't matter.

Think of it this way: If you are a true believer in climate change, then peak oil or peak of any carbon based fuel is your dream come true!

Again, I could not disagree more. People are not going to just lie down and die if they have no access to oil. They will burn whatever they can get their hands on, as we saw during the price spike. If peak oil means a lot more coal use, or cutting down every tree in the Amazon, or going to war over the remaining supplies - that matters, wouldn't you say?

Leanan you say,
"If peak oil means a lot more coal use, or cutting down every tree in the Amazon, or going to war over the remaining supplies - that matters, wouldn't you say?"

Of course. But if we accept the concept of climate change and all that the Hansen type climate models imply, wouldn't we have to hope for "peak everything", at least as regards fossil energy? We would have to accept that continuing to use oil, coal, tar sand or shale oil or any carbon based fuel would be a greater catastrophe than even the potential social unrest that stopping use of it would be.

If we assume that there will be no limits placed on fossil fuel usage, and we will indeed "burn anything" we can get our hands on, then the debate ends in a certain way...we would simply have to live (or die) with the consequences, which would dwarf the consequences of peak oil in both time and scale.

This is why I am such a supporter of spending on renewable energy, nuclear fusion and the ITER project: and the research being done there.

If we accept the premise of climate changed caused by carbon release by humans, AND we accept that we want to continue something like the modern technical age, then renewables become the only path forward...and it really doesn't matter how much it costs because we are fighting for our very existance as a modern world. The critical part is this...IF we accept the above premises, then it simply cannot matter whether there is more oil available in the ground than we could ever make use of...the climate change consequences make it absolutely imperative that it (and coal, and tar sand and shale oil) stay in the ground! No amount of fossil fuel left in the world would avert catastrophic outcome, and in fact the more oil, coal, tar sand and shale oil we could find and produce cheaply, the greater the coming catastrophe would be...so once more I am back where I began...IF we accept the models foreseeing dire consequences of global warming caused by fossil fuel use, the peak oil crisis is a footnote. It works out to a formula that looks like this:

Lots of affordable fossil fuel=catastrophic outcome for a long period of time and global in scale.

Almost no fossil fuel=catastrophic outcome for a long period of time and global in scale. Or mathematically, 0=0, a tautological argument, in which any additional definition is pointless.

For me, this was a CRITICAL breakthrough in my perception of the whole peak oil/global warming problem. If a person believes the above, then the only possible road forward is either renewables or fusion nuclear energy. If a person accepts climate change (never mind peak oil, it now looks like the least of our problem) and believes that neither of these (renewables or nuclear fusion) are viable, then...game over.


But if we accept the concept of climate change and all that the Hansen type climate models imply, wouldn't we have to hope for "peak everything", at least as regards fossil energy?

I guess I just don't see hope entering into it. It is what it is. I'm interested in what's happening, and what will happen, not what people hope will happen.

The critical part is this...IF we accept the above premises, then it simply cannot matter whether there is more oil available in the ground than we could ever make use of...the climate change consequences make it absolutely imperative that it (and coal, and tar sand and shale oil) stay in the ground!

But wouldn't peak oil add to the argument? For those who don't accept climate change, why not argue we need to transition because it's becoming ever scarcer and more expensive?

And wouldn't you want to know how much oil there was, because if we don't stop burning it, as we likely won't, it would be useful to know how much change we're in for.

Similarly, peak oilers should be interested in climate change, because rising sea levels and changing weather patterns will affect infrastructure (including energy and transportation infrastructure), as well as crop production.

I don't buy your argument. I confess, I don't really understand it. We're on different planets on this one.

I think it's a far more basic thing. Some peak oilers are concerned about climate change, like Bill McKibben and Richard Heinberg. They are more or less traditional "greenies."

But among peak oilers, there are also a lot of people who work or worked in the oil industry. Colin Campbell and Matt Simmons, for example. I think they tend to downplay climate change for a variety of reasons. It's not their area of expertise, they're not traditional greenies, and perhaps, they don't really want to think about the part they played in frying the earth.

Leanan, you say,
"I don't buy your argument. I confess, I don't really understand it. We're on different planets on this one."

Your remark makes me think of Kierkegaard's great complaint:

"People understand me so poorly that they don't even understand my complaint about them not understanding me."
Soren Kierkegaard

Okay, here goes: While my line of discussion may on the face of it seem esoteric and a purely theoretical argument about semantics, but the issue of carbon release has HUGE implications in the discussion of alternatives to oil and coal.

We know that if you combine the hydrocarbon BTU's that we are aware of into one "carbon" fuel basket, we have more than enough to provide the liquid fuel we would need for at least the rest of this century (we are already 10% through the new century as astounding as that may seem, and in one decade more will be 1/5th of the way through it!)

This combined "basket" of fossil energy would include coal, oil, natural gas, tar sands, heavy oils, and shale oil. All these combined are an enormous store of hydrocarbons...and that is before we even consider the potentially vast possibility of methane hydrates below the sea, and even leaving those aside, the amount of fossil energy is vast almost beyond comprehension.

So if the above is true (and all geology seems to indicate it is) then unlocking this fossil energy becomes a simple exercise of technology and economics. As one type of energy from the fossil basket gets more expensive, we simply develop tools to move to one of the other type in the basket. This has been the history of all non-renewable energy, energy that allows us to deveop and expand at a faster rate than our primitive attempts at using wind and some solar would allow: We have simply moved from wood and peat to coal, to oil, to natural gas. Is there any real reason to think we would not move onward to tar sands (as we are beginning to do) heavy oil (as we are attempting to do) coal to liquids (which will work but is to this point a rather expensive solution) and then to shale oil...we would be talking about BAU, business as usual in the fossil fuel extraction industry, and we have been masters at it to date...why would we believe we would fail to transition this time?

This is the positon often taken by the oil companies...if you will just let us, we will develop not only harder to reach oil (of which there is still a lot of), but coal to liquids, coal seam natural gas, "tight" gas which had been trapped in other minerals and rock, heavy oils, and on downt he list I discussed above.

No problem right? It is simply a technical and economic problem, and we humans have shown these are two areas we are very good at over the long haul. So no need to turn to the sun, no need to talk about limits, we have the energy. All is well....

Then the "Oh CRAP!" moment hits...carbon release leading to global warming and climate change. As the commercial says, THIS changes everything!"

The long and short of the argument is this....IF we accept climate change models as now presented, a lot of very plausable alternatives to crude oil have to be taken off the table...not because they are impossible to implement, not because they may not very soon be economically viable, not because the amount of liquid energy they could provide is too limited...but simply because every single alternative to crude oil that rests on the idea of transition to another carbon based fuel source is not viable due to carbon release alone...and for one reason, which is very difficult to see a way to overcome...release of the stored carbon, creating higher atmospheric tempetures, climate change and catastrophe.

Carbon release makes almost all of the discussions about fossil fuel energy moot: Say you can find more oil in the deep sea or the polar regions? So what, you can't use it.

Say there is billions of BTU's locked up tar sand or shale oil? So what, even if you can economically develop it, you can't use it.

Say there may be trillions of BTU's we could capture from ocean floor methane hydrates, so what, you can't use them.

Needless to say, coal to liquid and gas to liquid are completely out of the question IF you accept carbon release by humans as the cause of climate change. Most discussions about fossil fuel availability become moot exercises, of almost zero importance to anyone. If the oil, coal, gas, tar sand, shale oil, peat, methane hydrates are there (we know they are) and can be made economically viable (and that seems far from impossible) then we are still stuck with the great wall: YOU CAN'T USE THEM, unless you want to hurl the planet into an ever warming carbon bath...something that most climatologists say is simply not viable if you desire continued life on earth in any form similiar to the life we now know...IF you accept the consensus view of most scientists and climatologists.

Leanan, as you may have noticed, I do not make my views on climate change public often if at all, and if I do it is because my views "slipped out", mostly by accident. I think you can tell from my posts on TOD that I am VERY aware of the issue, and have spent time thinking and studying the implications of the discussion. There is a way in which the acceptance of climate change by carbon release clears the discussion and simplifies the thinking however: One sees that the test of fuel viability for the future comes down to one question...Is it a hydrocarbon fuel? If so, and climate change by human use of hydrocarbon is accepted, then the fuel source is not viable.

Given the above, we are left with only a few options: \
(a)Stop using energy (which is essentially impossible without consigning humans back to the status of beasts, basically a small number of tribal bands with no higher development possible)

(b)Move to renewables (expensive, time consuming, dispersed so that concetrated energy is a challenge, but the overall volume of energy is VAST, many times the amount of energy humans now use, and it keeps coming every year)

(c) Nuclear fusion (totally dependent on major technological breakthroughs, very expensive and so far impossible to accomplish, contain and control with current technology, but the promise is vast, and we know that nature does it in every star we can see, including our sun, and the breakthroughs in particle physics have been staggering)

There you have it. Even if we assume that we could venture into space and bring carbon based fuels back to earth from another planet or moon or asteriod, we would still be stuck with the wall of carbon release. Carbon release causing global warming changes the dynamic of future planning completely IF it is accepted as correct. That is why it is more than just an egghead argument about theoretical concepts. Once the concept of carbon release causing global warming, you might as well sign the death certificate for the fossil fuel industry and plan the funeral...fossil fuel is as dead as Ceasar no matter how great a quantity it may become available in nor if it can be purchased for a penny a pound...nothing can salvage the viability of any fuel that is cabon based IF, and this why this big IF is so important if you accept carbon release by human activity and climate change/global warming.

Leanan, thank you what has turned out to be a fascinating conversation that to me cuts to the very heart of deciding our path forward. In my opinion, the exact discussion we have been having should have an article and string dedicated just to this discussion, so great are the implications of carbon release/global warming in reframing our whole understanding of peak oil and the human energy future.

Roger Conner

interesting article on commodities given the recent mining tax approved in Australia:


Enough about oil, let's talk money! Dow hits the skids for an almost 3% decline as I write, and fears of Euro contagion keep spreading.

The much vaunted Euro is showing signs of being subject to reality, as it is now open published that Euro debt is more than 53% of European output....Euro/Dollar parity a possibility? Oh wait, I have talked about all this before...

In the meantime, metals commodities such as copper and aluminum are also in retreat...oh wait, I have talked about that too...:-)

In other news, Dictator Franco of Spain is still dead.


In other news, Dictator Franco of Spain is still dead.

Your friend?

Someone commented a few days ago about the likelihood of the 'wingnut conspiracy' element claiming that the Horizon event was a deliberate 'eco-terrorist' incident.
Today, a good friend sent along an e-mail from one her acquaintances who subscribes to many of these rather bizarre theories . . . and, guess what? It contains a link to a story that is almost exactly the sort of thing mentioned here, previously: http://www.greatamericanjournal.com/editor/archives/WasTheBPOilPlatformE...
The lunatics are running the asylum.

What's going on with CLM10.NYM? Seems to have gone off a cliff. Down nearly $4 in the last few hours?

I suspect that it moves opposite to the stock market.

Some sort of general big consolidation happening.

I need to start sniffing around the stock market in the next few months however given it was pretty much a fake recovery I suspect its finally starting to run out of steam.

My best guess probably into the fall is we will now see the stock market roll up and down how long dunno yet.
However it should be close to topping but is probably still being bolstered.

This suggest a bit of a roller coaster ride with the SP500 falling a few precentage points getting some bottom pickers (wrong) buying back up a again for a bit then down again. Same of course for the DOW so basically a sideways roll for a few months.

At some point if the fundamentals are driving oil prices higher we will eventually get a decoupling event with oil moving higher even as the stock market falls perhaps dipping initially but then recovering ahead of the market.

This is one of the signals I'm looking for not yet a full decoupling but a rebound in oil prices preceding the market. Indeed you might even see a sort of reverse coupling set in if it gets noticeable and people take it as a signal that a basic recovery is underway. That would be interesting and is possible.

Eventually however if its just that we are plain out of oil then we should see oil prices finally basically decouple from the market. A lot of people think the market is going to crash this summer. I happen to think it will hang in there for a bit longer doing this roller coaster thing at least into the fall. Farther than that I dunno yet that about as far out as I think I can see.

We focus on the fact that the oil prices crashed most of the world remembers that the stock market crashed after oil prices went to high they don't give a rats ass about the fact that oil prices crashed. The higher oil goes the more volatility we should see in the stock market and most importantly I suspect the peak for the market is probably in.

As far as price of oil goes until it breaches 80 and better 75 and stays there for a week or two I'll get really interested. If it can go back to 75 for a month very interested. Thats the sort of numbers that begin to look fundamental. In general as far as fundamentals go you really need to look at oil over a sliding 2 month and sliding 3 month window. We are basically near the end of the previous trend and the price rally over the last few weeks marks in my opinion the end of the winter price regime. Over the next three weeks or so we will enter the new spring/summer pricing season so we should see our new trend developing over the next three weeks or so.

Memorial Day is a sort of marker if you will for what I call the summer trend.

Right now my bet is on us moving into the 90's which is where I consider the price of oil to be unstable.
As we get around 90/100 that seems to mark the start of the deep pocket bidding war.

Fundamentally if oil was plentiful we should be trading at 65-75 at most more realistically 60-70. 75-85 is a sort of no-mans land if you will between having enough oil and serious supply concerns. Its a very unstable price
and it will be met with either more oil and prices falling back or we enter the bidding war zone.

The problem is if 75-85 does not induce higher production then neither will 90 100,120 etc etc regardless of what people say as 75-85 produces excellent profits for the oil industry.

So you can see why I'd like to see oil go back to 75 at least for a month if any of the claims taken as fact are correct. The longer it does not and the closer it gets to going into the 90-100 zone the more likely it is that I'm right and most of our facts are lies. And as I've posted in these situations if you have lying taking place then its certainly whoppers being told. Thus given the current pricing and what I've outlined the oil market is in the middle of making a pretty painful decision to disregard what its being told. Same for that matter for the stock market. Thus perhaps both will wallow around a bit before taking off in different directions.

Just wanted to follow up with something memmel discussed yesterday in some detail:

Oil could reach $100 a barrel - Kuwait
by Diana Elias on Tuesday, 04 May 2010

Any such change in the factors that could push the price to $100 would be temporary, said Fuzaie, an assistant undersecretary at the OPEC member state's oil ministry. Fuzaie is also Kuwait's OPEC governor.

Growth in the US, European, Chinese and Indian economies was increasing demand for crude and products and pushing up the price, she said. But large stockpiles in industrial nations were weighing on prices, she added.


Yes, this is about the sixth time OPEC has mentioned $100 oil over the last month.

Will it get there? Well I mentioned yesterday that a 'national default' could temporarily take down the price of oil, and that is still a possibility, as well as more troubles from Iceland's volcanoes. But barring those kinds of events, yes I do think oil is headed to $100 before the end of summer.

Will there be a national default? Markets are well into the panic stage at this point, and it is possible but unlikely that we will see the financial panic of 2008-2009 revisted (at least not yet). Europe and the ECB were slow to react to the last crisis, and are slow to react this time. What would happened if the Federal Reserve didn't lend Europe $550 billion in 2008? We don't know but it's likely that financial markets in Europe would have collapsed, which would have lead before long to a collapse of US financial markets.

I thought some kind of lesson was learned in the last crisis, but I may be wrong. If the Fed jumps in here again, the next round of liquidity to stem the current crisis will now have to exceed previously efforts, and will eventually push up the price of pretty much all commodities to new records. As memmel explained yesterday, central bank and fiscal policies encourage increased consumption of oil, so until they stop demand for oil will stay strong.


Kuwait's oil minister said last week that OPEC would pump more oil if the price went above $100 and stayed there.

Notice we have the addition of "and stayed there".

One thing is they have a lot of sand for drawing line in.
Oil however is a different issue.

I'd like suggest Kuwait consider hiring this guy to handle their PR over the next six months.

Bahgdad Bob

Check out Robert Fisk's interview for the CBC Current where he talks about Pakistan and the region's precarious security situation with implications for NATO troops fighting in Afghanistan..

Shows - Current Video Beta, April 30, 2010

From the very start, the Pakistanis have wanted basically to control Afghanistan since they are losing out in the Kashmir dispute with India. The Americans are keen to support the Indians mainly because they want India as a buffer state against China...

Time on video feed: 2:25-2:38

In the murky sidebar world of real politik, the cozy Chimerica relationship masks some serious jockeying for geo-political advantage. The pieces are being moved around the chessboard and Pakistan and Afghanistan are pawns in a loftier game of strategic control.

Like in business, like in diplomacy, like in warfare, it's location, location, location.

Matt Simmons chimes in on the spill in his usual buzz-kill manner

Few people have a more apocalyptic view than Matt Simmons, retired chairman of the energy investment banking firm Simmons & Company International and a 41-year veteran of the industry. Simmons, who will speak at the Offshore Technology Conference in Houston this week, has been famous in recent years for warning that the industry is running out of oil. Now he sees a disaster on an epic scale as the pressurized subterranean reservoir known as the Macondo field, tapped for the first time by Deepwater Horizon, continues to vent into the gulf.

"It really is a catastrophe," Simmons said. "I don't think they're going to be able to put the leak out until the reservoir depletes. It's just too technically challenging."

Do they have any estimates as to the size of this field?

I believe I saw 100 million bbls but not sure if that's an official BP number.

And the well will be killed long before depletion occurs. The relief well will do that. But a lot more oil may be leaked before that happens.

I'm surprised -- no comment on the item

Saudi oil official raises awkward but crucial questions ..?

Last week, an unexpected warning came out of Saudi Arabia ... message was blunt. Unless [blah blah] ...the kingdom's ... crude for export ... falling by as much as 3m barrels per day by 2028.

So: this month a warning that KSA will be running short "by 2028." Next month or next quarter, the warning will be the same, but "... earlier than first thought." The following month, the timeframe will be 2022. And so on. Borrowing from Rockman, they'll label it the "reserve replacement problem", or something similar that takes a while to decode.

This is how to manage the news of peaking production, I guess. Don't give it to 'em straight. Just edge it into the backs of people's minds, so they don't panic. It becomes an unspoken background to planning. Nice!